Yes unfortunately they do count. I still think this rule is terrible, because player A made a closer match then player B, yet the person that picked player B wins.

When something similar happened at Palermo, when everyone lost Day 1, I used my own discretion and gave runnerup to the most who WON the most games because only one person made Day 2 and I needed a runnerup. Someone picking someone who loses 6-0, 6-0 shouldn't get it over someone who loses 6-7, 7-6, 7-6. I think this rule needs to be changed where if a losing pick needs to be counted to determine a winner, these matches do not count but only if tied after the other picks. From there, whoever won more games wins.